At his State of the City address, LB Mayor Bob Foster calls for pension reform

At his State of the City address, Long Beach Mayor Bob Foster announced a direction for the upcoming year that included a call to change the Public Employees Retirement System.
When Foster took the stage at the city’s Center Theater on Tuesday night to deliver his annual address, he acknowledged the city’s achievements and its ability to adapt to a new financial reality when budget cuts reduced staff and city services.
“First, government was too big,” Foster said. “While few in government want to admit it, we were all just a bit too complacent in the past. Today we perform needed services with far fewer resources.”
Foster highlighted the accomplishments of the police department, which announced last week that crime rates have seen a dramatic drop. The murder rate is at its lowest since 1971, he said, and violent crime is down by 13 percent.
The mayor, who was elected to a second term in July, praised the city’s ability to obtain federal stimulus funds to pay for infrastructure projects around the city. In addition, despite the financial hardship, the city was able to make significant breakthroughs to turn around its finances.
“We not only bridged a $23-million budget gap, but we did so while maintaining our $9-million Budget Stabilization fund,” Foster said.
But Foster presented several concerns about the city’s finances, and he focused on a proposal to make significant changes to the pension funds of public employees.
The urgency of the need for pension reform has been stressed by city representatives in the past. According to the city manager’s projections over the next decade or two, the city’s employee pension system is underfunded by $1.2 billion.
To help resolve this problem, Foster proposed to apply contracted raises to the employees’ portion of pension costs.
“Over the next several years, the employees’ contribution would increase until their full and fair share was reached,” he said. “Employees would not see the raise in their check, but their pay would not decline, and it would gradually get to a point where they were paying their fair share.”
Although Foster did not specify during this speech about how long employees would be predicted to work without effectively seeing a raise in their paycheck, the mayor outlined other details in a proposed plan for pension reform.
Foster also recommended new pension rules for new employees, which include a proposal to raise the retirement age from 50 to 55 for public safety workers. The retirement age for other new city workers would be changed from 55 to 60.
Foster estimated that the cumulative deficit from fiscal years 2012 to 2014 would be about $59 million. If the city implemented the changes he proposed, the city’s deficit would be cut by more than half to $28 million, he said.
Four labor organizations agreed to the dramatic changes to the pension system, according to Foster, but three of the largest employee organizations did not agree to the proposed changes. The groups that represented the police, fire and machinists “took their raises and rejected the reforms,” he said.
Foster stressed the need for urgency. “But the future of public pensions is so clear– they cannot be sustained. Claims were made and will be again that we are putting life and property at risk calling for reductions in all areas. That’s simply not so. It is the unreasonable rejection of reform and an ingrained entitlement mentality that puts our city at risk.”
Foster asked to confront the problems now. “We will continue to engage in collective bargaining to bring these changes about,” he said, adding that he was not optimistic about the outcome of their efforts.
“Therefore,” he continued, “if I am unsuccessful in bargaining for these changes, I will propose a ballot initiative that will constrain future mayors and councils from providing any more in pension benefits than those outlined above. These restrictions, if passed, will go into effect when the current contracts with our unions end,” he said.
Details of his proposed ballot measure were not available from the mayor’s office.
“Our future demands that we stabilize our finances and put our house in order,” he said.
Following Foster’s speech, Seventh District Councilmember James Johnson said he supports the mayor and the need for pension reform.
“The time has come now to take on the long-term challenges,” Johnson said. “Because if we don’t do it, what we’re doing is taking all of our problems and giving up to our children saying ‘you deal with it.’ And that’s simply immoral,” he said. Johnson noted that he ran for office on a campaign to fix pension reform.
Fourth District Councilmember Patrick O’Donnell approved of Foster’s overall positive message. He said that the pension reform issue affects his district because it affects the city’s coffers. “It affects our ability to finance the everyday operations and services that people want delivered: police, fire, streets, sidewalks, libraries,” he said.
O’Donnell wasn’t aware of the ballot initiative that Foster had proposed until Tuesday night. The councilmember said that he would have to review the ballot measure and its legal implications.
“But”, he added, “It would be my preference that those issues are worked out at the table with the employee associations so that we don’t have to go to a ballot measure. The answer here is people being reasonable, not people being political.”